Is it unethical to overprice a listing, or as some would say, “buy a listing”?
Here’s what I mean:
Seller needs to make $400k. House is worth $335k. Realtor tells them it’s worth $425k in order to secure the listing, with the intent of asking for a price reduction in the next few weeks and months.
Not only is buying a listing a waste of time – mine and the Sellers’ – but I’m thinking that the answer to the afore-mentioned question is “yes.”
Someone asked me this question last week, and after a bit of deliberation and thought, I think that the argument could be made that a Realtor “buying a listing” – telling a Seller what they want to hear rather than what they need to hear – is a breach of the Realtor Code of Ethics.
Standard of Practice 1-3 REALTORSÂ®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value.
The services which REALTORSÂ® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.
Proving the breach is the challenge.
It’s my job to provide the best possible advice and guidance to my clients – buyers and sellers – so that they can make the best possible decisions; after all, they are the ones who are buying or selling. Part of my job is to know the market – the trends, the inventory, the market values – and to convey this information to my clients.
Realtors do in fact have a Code of Ethics and a Board that enforces them. The challenges to a viable Code of Ethics are (at least) three-fold:
1 – The system is self-enforcing (and I could make the argument that if I were to file a violation against another agent, I could be violating my fiduciary duty to a future client).
2 – Few members of the public know that they can file a violation and those that do know don’t care enough to do so. It’s easier to say, “my Realtor sucks; I won’t use him next time (in seven to ten years).
3 – Is the NAR Code of Ethics Meaningful? – For those who choose to live by the Code, yes. For those who don’t, there are no real consequences that I have seen.
Is incompetence unethical?
Is deliberately misleading an owner as to market value unethical? Yes. Is it enforceable? Doubtful.
Is ignorance unethical?
This is one of the many reasons that I share all market data with my buyer and seller clients – I want them to be educated, informed and competent as to the decision that they are making based on my professional advice.
Related reading: At What Point Does an Agent Become a Criminal?
Note to sellers: Vet your Realtor. Find out their production. Repetition leads to excellence and competence.*
*Search Malcom Gladwell’s Outliers: The Story of Success for “ten thousand hours”